After much anticipation, Tesla unveiled its first robotaxi models, the Cybercab and the larger Robovan, during an event on Thursday night. However, the presentation failed to inspire investor confidence, benefitting rideshare companies like Uber and Lyft. Following Elon Musk’s announcement, Lyft shares rose by more than 9% while Uber’s increased by 8%. In contrast, Tesla’s stock fell by over 7%.
Musk had promised a fleet of over a million robo-taxis by 2020, but delays have persisted. The recent launch of the Cybercab included ambitious claims, such as a price tag under $30,000, yet it lacked a detailed plan on how to achieve these goals.
Wells Fargo analyst Colin Langan remarked that the presentation lacked many expected details and that the demonstrations were brief and conducted in a low-complexity setting. Investors were also hoping for a clearer understanding of Tesla’s vision, which centers on a strategy that does not utilize Light Detection and Ranging (LiDAR) sensors like other autonomous vehicles. The short presentation took place on a movie studio set instead of an actual road, limiting the showcase of the car’s capabilities. Musk expressed a desire to have robotaxis operational before 2027 but acknowledged his tendency to be overly optimistic about timelines. Tesla did not offer a comment on the matter.
Tesla’s autonomous driving service has posed a challenge to rideshare companies that have mainly shared the U.S. market. Given the lower operating costs of a robotaxi compared to traditional rideshare services, this could significantly impact human-driven rideshare operations.
Uber is also investing in autonomous rideshare technology through partnerships with Waymo and Cruise LLC, a subsidiary of General Motors. However, CEO Dara Khosrowshahi cautioned that profit margins for autonomous services would take years to develop, leaving Uber vulnerable to competition from Tesla.
With waning investor confidence in Tesla’s plans for a fleet of self-driving taxis, the landscape may be shifting back in favor of Lyft and Uber. Analyst John Colantuoni from Jefferies characterized the event as a favorable outcome for Uber, offering a buy rating for the rideshare company.
The success of rideshare companies in competing against Tesla will hinge on the operating costs associated with autonomous vehicles. Major players like General Motors are investing heavily in robotaxi projects to find an economically viable model.
As Langan noted, “People are starting to realize that this could be a long horizon,” indicating that investments may be substantial over time.
According to analyst Ken Gawrelski, a single Waymo vehicle, valued at around $200,000, includes both the automobile and its LiDAR technology, making deployment substantially more costly than a human-operated rideshare vehicle. He stated that Waymo is currently more appealing to rideshare investors than Tesla due to its existing high production costs.
While Tesla’s underwhelming presentation of its Cybercab and Robovan may have eased some concerns for Uber and Lyft’s short-term future, these established rideshare companies will continue to monitor how Tesla addresses its $30,000 robotaxi pledge. Gawrelski emphasized the importance of concrete plans for Tesla, particularly if it opts to engage with a third-party insurance provider to enhance safety data and insure rides, as seen with Waymo, Uber, and Lyft. Despite Musk’s intentions to launch self-driving cars in California and Texas next year, Gawrelski warned that until tangible evidence of these plans emerges, Tesla’s potential disruption to the rideshare market remains uncertain.